Identifiers have been used to identify all types of products. Labels are one type of identifier and can include a logo that identifies the source of a product and the type of a product. Sometimes the label includes a serial number. Special grading codes can be included in labels for the purpose of identifying the grade of a product, uniformity of a product or the source of a product. Labels are also placed on a product to specifically identify the exact source within a manufacturing plant of the product. A serial number or some other identifier can be used to identify the product while it is being manufactured. The serial number or some other identifier is scanned during the various stages of manufacture and records are kept as to the processes used and the manufacturing machines used to form the product. This can be useful in identifying the cause of product failures. For example, if one manufacturing machine is not performing correctly and some of the products made on the machine pass inspection or do not undergo inspection, a number of products can end up in the marketplace with an obvious defect or a latent defect. When the product fails, the manufacturing information can be used to track down other products that may also have the same latent defect.
Labels or similar identifiers are also used to authenticate a product when a product fails or when a product is returned. A manufacturer can be assured that they have ownership of a problem when the product label can be used to authenticate the product as one the manufacturer produced. In many product areas, there are large numbers of counterfeit goods that appear, especially to the consumer, to be original goods. When a counterfeit product is returned, in some instances manufacturers are fixing or replacing goods that they did not originally manufacture. This adds expense to the manufacturer.
Another problem is diversion of products. In some instances, certain parts are made by subcontractors of a manufacturer. The subcontractors generally bid for the job. The bidding can be fierce with high pressure to bid low. One tactic employed by subcontractors is to bid the jobs with little or no margin. The subcontractor produces more parts than is required by the contract with the idea that these additional parts can be sold as original parts. The profits are made on selling the additional parts. This tactic is known as diversion. When a diverted product is returned, in some instances manufacturers are fixing or replacing goods that they did not originally sell or manufacture. No profit was generated on the diverted product. Fixing or replacing diverted products also adds expense to the manufacturer of the product.
A constant challenge for manufacturers is to authenticate product that has been manufactured and sold by the manufacturer so that the responsibility for fixing or replacing a defective product can be determined to rest squarely with the manufacturer. The manufacturer loses money when products can not be authenticated and they fix or replace counterfeit products or diverted products.